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By Bloomberg

Gold headed for the biggest weekly gain in three months after China’s weakening of the yuan spurred concern of widespread currency devaluation.

Prices were near a three-week high on Friday after the Asian country said it bought about 19 metric tons of bullion last month. China has added more than 600 tons of gold to reserves since 2009 to help diversify foreign-exchange holdings as it seeks to raise the international profile of the yuan.

Following the biggest monthly drop in two years, gold has risen almost every day in August. China’s decision on Tuesday to devalue the yuan sparked concern that a slowdown in the Asian nation, the world’s second-largest economy, is deepening. Vietnam widened the trading band on its currency Wednesday, underscoring the risk of competitive devaluations that’s dragging down emerging-market exchange rates from Brazil to South Korea.

“The Chinese devaluation is the right one to focus on for the gold market,” Matthew Turner, an analyst at Macquarie Group Ltd., said by phone from London. “When central bankers lose control, as the PBOC appeared to do this week, gold tends to do well.”

Weekly Rebound

Bullion futures for December delivery added 0.2 percent to $1,118.20 an ounce by 7:44 a.m. on the Comex in New York. They are up 2.2 percent since the Friday close. Bullion for immediate delivery rose 0.3 percent to $1,118.98, according to Bloomberg generic pricing. Price ended a seven-week stretch of losses and are still down 5.5 percent this year.

The PBOC said in a statement Friday that it increased holdings to 53.93 million ounces, or about 1,677 tons, by the end of July. The update comes almost a month after the PBOC ended six years of mystery surrounding its hoard, revealing a 57 percent jump in assets since 2009 and overtaking Russia to become the country with the fifth-largest stash.

Silver for September delivery added 0.3 percent to $15.44 an ounce in New York and has gained 4.2 percent this week. Palladium rose 0.9 percent to $621 an ounce. Platinum was little changed at $993.50 an ounce. It’s up 3.3 percent this week, the most since February 2014.